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Grading 10%: Class Presentation (including attendance) 10%: Weekly Quizzes on Reading 10%: Assignments (Cases) 30%: Midterm Exam 40%: Final
Definitions
Entrepreneurs are innovators who use a process of shattering the status quo of the existing products and services, to set up new products, new services o For example, Thomas Alva Edison, Steve Jobs, Brin and Page, and so on
Entrepreneurship can be described as a process of action an entrepreneur undertakes to establish his enterprise
Enterprise is the business organization that is formed which provides goods and services, creates jobs, contributes to national income, exports and overall economic development
Production Factors
Fourth Factor
Production Factors
Primary
Entrepreneurship
Land
Labor
Capital Asset
Secondary
Material
Energy
Production Process
Capital Labor
Raw Material
Outputs
Entrepreneurship
Material
Forms of Enterprise
Liability Private Limited Company Shareholders
Corporation
Liability
Business Structures
Partnership
Sole Proprietorship
Advantages
From legal point of view easy to form & dissolve
Least government intervention Very flexible functioning
Sole Proprietorship
Disadvantages
Unlimited personal liability
The business ends if the owner quits for any reason Limited ability to raise capital Fewer resources and talents to draw
Partnership
Advantages
Pools the management techniques, decisions
Opportunity of having collective fund Partners are taxed individually
Partnership
Disadvantages
Not easy to find suitable partners
Unlimited personal liability of at least one partner Hard to get large sums of money
The actions of one partner can make the entire business liable, accumulating debts, etc.
Profit and loss can be allocated differently than the ownership interests
Corporation
(Public Limited Company) Advantages
The company is a legal entity independent of its shareholders
Limited personal liability Ownership is transferable through stock sales Unlimited life Usually it is easier to earn money A larger pool of talent and expertise The company and its members are taxed separately
Corporation
Disadvantages
Expenses of managing a corporation can be high, e.g., costs of founding, issuing shares, etc.
Lack of representation of minority shareholders Extensive record keeping is required The business is known to everyone including competitors due to mandatory publications of constitution, statements, etc.
Double taxation
Franchise
A Franchise is a business in which the owner of the name or method of doing business (the franchisor) allows a local operator (the franchisee) to set up a business under that name.
Franchisor
Advantages
Way of expanding business quickly
Financing costs shared with franchisee Franchisee usually highly motivated
Disadvantages
Loss of some control to franchisees Franchisee can influence the business
Franchisee
Advantages
Business format proved; less risk of failure
Easier to obtain finance than own start-up Training and support available from franchisor
Disadvantages
Not really your own idea Lack of real independence
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